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Improve the LCBO with specialty boutiques, better pricing: experts

The Liquor Control Board of Ontario (LCBO) — a 639-store monopoly racking up $5 billion in annual sales — should be saving much more money and putting an end to grumbles about the lack of selection.

That was the message TD Bank chair Ed Clark had for Premier Kathleen Wynne in a series of recommendations released earlier this month, suggesting that Ontario’s main source for liquid libations is in trouble and could be far more profitable

With Clark calling on the province to make big changes, Torstar News Service asked experts how they think the LCBO could be improved.

Here’s what they had to say:

Sell more local and regional brews

The LCBO stocks its shelves with plenty of products from Molson Coors, Labatt and Sleeman, but there are fewer local and regional items available, says Toronto Beer Week co-founder Troy Burtch. If the LCBO shed some nearly-duplicate products from the bigger companies, he says more shelf space would be available for smaller and local breweries. He wants the LCBO to consider paring down its offerings so that it isn’t selling single cans, six bottle packs, large format cans and six pack cans of the same product.

Implement a better pricing scheme

“As one of the largest importers of alcohol in the world, the LCBO has more than enough negotiating power to demand better prices from beverage retailers, yet they don’t,” says Ben Johnson, a beer blogger and BlogTO’s beer writer. He points to a 2011 Ontario Auditor General’s report noting that the LCBO has occasionally asked brewers to charge more. By jacking up prices, Johnson says, the LCBO is able to charge more for products, making a new price structure with incentives to negotiate lower wholesale costs necessary.

Allow competition for the LCBO’s warehouse system.

Right now space is very tight in the LCBO’s warehouses and that limits what and how much can be brought in, Toronto Star beer writer Josh Rubin notes. Allowing outside companies to create warehouses would instantly add capacity, thus increasing choice.

Allow individual LCBO store managers to stock a few cases of product already in the LCBO’s private order/consignment system.

Wider access to these items — often brought in by import agents for sale to restaurants or other private customers — would easily add more selection, says Rubin.

Sell 12-packs of beer

Torontonians looking to nab a 12- or 24-pack of beer have had to skip the LCBO, but TD Bank chair Ed Clark recently suggested the government should put an end to that practice. In a report for the premier, he recommended the LCBO be allowed to sell 12-packs of beer, while The Beer Store remain the primary retailer of cases of 24.

Allow consumers to order products to specific stores online

The LCBO website needs an overhaul allowing users to see where products are available, order them and have them ready for pick-up at the nearest store, says America Walks into a Bar author Christine Sismondo. She says this is already a common feature at alcohol retailers in the U.S. like TotalWine.com, but complains that the LCBO site has limited functionality because it only allows consumers to search stock at nearby locations.

Develop an auction system for special releases

For alcohol aficionados, Sismondo says tracking down specialty products can be a hassle. Items like sherry, chartreuse and vermouth often come in minute quantities so the LCBO offers only a few bottles of each special release at select stores. Sismondo recalls once visiting an LCBO by Leaside in search of George T. Stagg, a limited production bourbon whiskey. It was a few days before three bottles were to be released per store, but already, she says the product was sold out. “It feels like a rigged game when it comes to highly specialized product in small quantities,” she says. “These products should be sold online and in an auction.”

Build small neighbourhood stores to expand hours

LCBO smaller satellite or corner stores operating with expanded hours that offer sales long after bigger LCBO stores close should be built, suggests the Ontario Beer Revolution, a grassroots movement aimed at ending the Beer Store monopoly. “(The stores) might have a more limited selection at first, but over time, a neighbourhood’s buying habits would shape what that store would sell,” they say. “This would seriously cut down on drinking and driving if people are able to walk to a corner LCBO outlet to get beer or wine.”

Offer growler filling stations

It’s hard for small breweries to showcase beers, especially when they are not yet available as packaged products, says Peter Chiodo, the owner of The Flying Monkeys Craft Brewery in Barrie. He recommends growler filling stations at LCBO flagship stores as a solution, which would offer brews on-tap for bottling in stores at draught prices.

Implement consignment services

Some alcohols are sold by the case creating disappointment for Ontarians only looking to get their hands on one or two bottles. By offering consignment services at LCBO locations or at independent outlets set up by the board, Oliver Dawson of The Beer Lovers Tour Co. says, more sales could be promoted.

Construct specialty boutiques

Privatized or LCBO-run boutiques specializing in whisky, beer or wine would combat LCBO claims that stores can only stock a given number of brands per store, says Stephen Beaumont, the co-author of The World Atlas of Beer. He says the precedence for boutiques has “already been set in Alberta pre-privatization and B.C., so there is no reason to believe that this option would not work.”

Create more competition with other alcohol purveyors

More competition between the LCBO, The Beer Store and wine purveyors like the Wine Rack is needed to drive down prices and offer a more expansive selection, said the C.D. Howe Institute in an August report. The policy research organization recommended allowing sales of wine and beer in grocery and convenience stories, permitting beer sales licensing to other retail outlets and licensing private wine stores to wineries in order to boost competition.